IEA Welcomes BoG Endorsement Of Proposal To Cap Gov’t Borrowing

The Institute of Economic Affairs (IEA) says it welcomes the Bank of Ghana’s endorsement of proposal to cap the government’s borrowing.

During a press briefing last week, the governor of Ghana’s Central bank reportedly threw weight behind “capping borrowing conversations”.

Capping borrowing, the IEA is sure will help control the country’s public debt level.

In a press statement, the IEA said it first made this call to Parliament in November 2021 while expressing concerns that “borrowing implied by budget deficit seemed to be breached with impunity.

“Thus it was necessary to tie the hands of the Finance Minister and insist that any additional borrowing beyond the budget estimate for the new ceiling should be subject to the approval of Parliament just as pertains in the United States”.

The IEA at the time held that this was necessary to keep the country’s debt at sustainable levels to avoid debt service.

This suggestion, the Institute said, has been laid before the International Monetary Fund (IMF) team which is negotiating with the government on a programme.

In addition to the capping, the IEA says it also suggested that the Fund implement the ceiling of 5% GDP on fiscal deficit and the ceiling of 5% of the previous year’s revenue on BoG’s lending to the government.

Last week, the World Bank declared Ghana’s debt as unsustainable.

Source: opemsuo.com/Hajara Fuseini